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Artículo Revista de Economía

Junio 2014 Vol.1 No.1 41-64

Institutional and cultural implications on internationalization analysis of

multinational firms

J. Vargas*†´

´University of Guadalajara, Periférico Norte 799 Edif. G201-7 Núcleo Universitario Los Belenes,

Zapopan, Jalisco, 45100, México, Tel. +5233 37703340 ext. 25685

Recibido Enero 08, 2013; Aceptado Abril 13, 2014

___________________________________________________________________________________

This paper is aimed to analyze some of the institutional and cultural implications on

internationalization analysis of multinational firms. The analysis begins questioning what the main

institutional and cultural variables are considered in the involvement of internationalization of

multinational firms. To answer this question, firstly it is reviewed the literature on internationalization

of multinational firms based on institutional and cultural frameworks to find the main research

tendencies. Secondly, these institutional and cultural variables are analyzed to integrate findings.

Finally, it is discussed and concluded the need to design a better institutional and cultural balance

among the development of a glocal-regional transformation, convergence and governance.

Cadaverous Entomofauna, date of death, forense, arthropods, Valley Area.

___________________________________________________________________________________ Citación: Vargas J. Institutional and cultural implications on internationalization analysis of multinational firms.

Revista de Economía 2014, 1-1:41-64.

__________________________________________________________________________________

___________________________________________________________________________________

*[email protected].

† Investigador que contribuye como primer autor.

© USFX-Bolivia www.usfx.bo

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Junio 2014 Vol.1 No1 41-64

USFX® Derechos Reservados

Vargas J. Institutional and cultural implications on

internationalization analysis of multinational firms.

Introduction

To take advantages of the global economy,

multinational firms must learn how to manage a

wide variety of institutional, organizational,

governmental, etc., relationships. Among other

institutional variables, some academics have

referred to poor infrastructure, lack of

institutional capacity from the government and a

sound enabling business environment as

challenges posed to multinational firms that may

become part of the solution contributing to the

prosperity of society in developing economies

(Peinado-Vara, 2005).

Regarding some cultural variables that

have some effects on the performance of

multinational firms, scholars have proposed some

static and dichotomous perspectives based on

some demographic variables and cultural

dimensions.

The market-centered approach, the

institutionalism and cultural approaches and the

resource-based theory are the theoretical

frameworks that can be used as an integrated

theoretical approach to explain the

internationalization processes of new

multinational firms and business groups. Here, in

this paper it is analyzed some institutional

variables such as the outflows of foreign direct

investment, influence of government policies,

governmental institutional arrangements, etc.

Considering some findings of the reviewed

literature on institutionalism and culture, this

paper centers the analysis on the implications of

intangible capital, learning and innovation on

multinational firms.

Later, this paper explores a more dynamic

and multivariable approach to organizational

culture to explain the complexities of

multicultural distributed teams and contextual

factors on performance of multinational firms.

While doing so, the paper reviews the

involvement of organizational culture in

internationalization processes of multinational

firms centered on strategic alliances and joint

ventures and the creation of a third culture of

management and leadership styles.

One of the most important orientations

that multinational firms have to face when

making decisions to compete in foreign

economies is based on the implications of local-

global culture of corporate social responsibility

strategy.

Finally, this paper also discusses and

advances some conclusions based on the

tendency towards a development of a glocal-

regional institutional and cultural transformation,

convergence and governance.

Institutional framework

Institutionalism and evolutionary economics

approaches consider firms as dynamic economic

agents of economic and social institutional

networks. Institutional models are used to explain

foreign direct investment (FDI) from emerging

economies.

In the post-globalization period

multinational firms face strong institutional

arrangements, lower costs of investing abroad,

and other inducements. These necessary measures

are proper institutional and legal arrangements

centered around foreign investment laws and to

guarantee a competitive and stable exchange rate

mechanism.

Modernization of the economic

institutional system of any country fuels foreign

direct investment inflows and also outward flows.

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It has been assumed that foreign

investments should be highly responsive to local

differences in the investment climate, institutional

financial arrangements, rates of return, taxes and

other regulations and labor costs.

Influence of government policies and

other institutional factors such as academic and

research and financial institutions are important,

as well as supportive structures and network

linkages to facilitate trust, cooperation and

coordination among entrepreneurs.

Weak governmental institutional

arrangements and settings hardly can provide

stability in fragile environments but can be

compensated by other organizations such as

private firms. Prior experience of new

multinational firms in emerging economies with

weak institutional environment is crucial in the

development of capabilities to compete in foreign

markets.

New multinational firms emerge in less

developed economies where the institutional,

legal and political environments are weak. This

situation may be one of the reasons why the

institutional investors maintain a peso exposure

and diversify the credit risk of their portfolios

away from issuers, the Federal Government and

large Mexican corporations.

Intangible capital, learning and innovation

Multinational firms have some specific

advantages on ownership of intangible assets and

common governance of cross-border value-added

operations, internalizing firm’s managerial,

organizational and institutional dynamic

capabilities and locating in a particular foreign

market.

Multinational firms from emerging

economies are adopting soft and intangible

capital such as managerial and organizational

techniques and skills as firm specific ownership

assets besides the institutional and home country

specific and internalized advantages to be used

across the borders.

Critical activities of knowledge and

innovation tend to be retained in home countries

despite the ongoing globalization processes.

Global brands promoted by multinational firms in

global markets can take advantage of affinities

with national brands by inducing positive images

based on national cultures.

Multinational firms identify global

knowledge relevant to management across

national borders despite the values embedded in

national cultures that push for knowledge and

expertise operationalized with local adaptation

(Sparrow et al., 2004: 110).

Management styles having different

background in terms of national cultures may

result in the emergence of a third culture and

redefine the exchange relationships (Pothukuchi

et al., 2002; Rodriguez and Wilson, 2002).

In the global and transnational context,

transnational learning structures are relevant for

the global learning outcomes related to the

assignment of tasks and collaborative generation

of organizational knowledge among formed

committees, project groups, development and

diffusion of global and national policies and

capabilities, capture and sharing of global

organizational culture and best practices.

Transnational learning structures through global

policy, global culture and best practices, may

contribute to global integration using mechanisms

based on person to person (Sparrow et al., 2004).

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One form of tacit embedded

organizational knowledge is cultured knowledge

based on the assumptions, beliefs and norms of

organizational practices and determined by the

globalization priorities. Variations in cultured

knowledge in multinational firms are high across

the borders in different national settings. National

cultures affect knowledge sharing (Simonin,

1999; Yoo & Torrey, 2002).

As a mechanism, socialization of cultured

knowledge facilitates shared communication and

understandings through the surfacing of norms

and assumptions (Senge, 1990). As an example,

the embedded cultured knowledge can be

accessed through the connections of the social

network created by the relationships of the

expatriates (Nohria & Ghoshal, 1997: 158).

Institutional factors and forces explain

how multinational firms organize their knowledge

and innovation activities. The institutional

environment and organizational contingencies

influence the learning structures of multinational

firms operating across national boundaries.

Transnational learning structures are more

significantly to diffuse developing know-how,

best practices and core competencies,

development of a global organizational culture

and in a lesser extent in development and

adaptation of global policy (Tregaskis, Edwards,

Edwards, Ferner, and Marginson, 2010).

The institutional context plays an

important role in shaping organizational learning

behaviors of multinational firms. Organizational

learning as a dynamic process of the individual

knowledge moves through learning structures

with the knowledge from the individual, group

and organizational levels captured within the

organizational processes, competences and

culture (Huber, 1991).

The analysis of learning behavior in

multinational firms is embedded in national

institutional context and the organizational

contingencies framed by the institutional and

learning theories to explain learning structures

across national borders. Transnational social

learning structures are a set of cross-national

intra-organizational structures based on social

interaction that support learning associated with

the development and diffusion of global policies,

organizational competencies and culture, and best

practice and know-how (Tregaskis, Edwards,

Edwards, Ferner, and Marginson, 2010).

Institutional forces embeddedness play a

crucial role in the supporting learning structures

and interactions with learning processes

(Lundvall, 1999). Tregaskis, Edwards, Edwards,

Ferner, and Marginson (2010) found that the

interaction between the institutional and firm-

level contexts provide explanations of learning

structures used by subsidiaries of multinational

firms. Business capabilities at firm-level and

institutional arrangements are significant in the

transnational multi-level learning processes.

National knowledge and innovation

system structures provide continuous interactions

between multinational firms and institutional

environments. Multinational firms are more likely

to adopt national innovation systems for local

labor markets in host countries that share similar

institutional arrangements (Guerreri & Tylecote,

1997) and technological specialization (Pearce &

Papanasatassiou, 1999). The national business

and innovation systems are related with national

institutional forces shaping the skill systems and

technological specialization required by local

labor market which also have an impact on the

transnational learning systems of multinational

firms.

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Infrastructural and institutional support

structures and intermediary organizations

providing resources, technology transfers,

financing, etc., facilitate innovation processes

based on learning and knowledge processes

acquired in the spillovers occurrence (Doner,

2001; and Aoki, 2001). Spillovers have been

conceptualized narrowly and always related to

multinational firms disregarding the efforts of

local firms and supportive factors within the

national innovation systems, the systemic

infrastructure and the institutional support

systems. Spillovers occurrence also depend on

absorptive capacities, support institutional

structures, trade and interactions, ownership

structure, firm size, performance, etc., besides the

presence of multinational firms and foreign direct

investment.

The suggested alternative framework for

complex analysis of spillovers occurrence is an

endogenous, evolutionary and institutional model

that approaches firms as dynamically embedded

and changing economic-social and institutional

networks from the perspectives of cluster and

network dynamics and technological innovation

frameworks of reference.

Culture has a significant effect on

knowledge transfer (Sarker, 2005). Firms with

diverse international experiential knowledge are

more likely to develop and institutionalize

dynamic capabilities such knowledge transfer

routines. Globally distributed teams share

organizational knowledge as the result of

individuals learning different cultures and

divergent norms and beliefs. Culture of teams has

a significant effect on knowledge transfer (Sarker,

2005).

Individuals centered on individualistic

cultural values are perceived as transferring more

knowledge than those individuals from the

collectivist culture.

Knowledge transfer routines require be

developing and institutionalizing for effective

knowledge transferring (Dyer & Kale, 2007).The

institutional entrepreneurial ability is related with

the skills or know-how needed to operate in the

peculiar institutional conditions of less developed

countries (Caves, 1996; Lall, 1983; Lecraw,

1993.

Also, it is important to analyze diverse

perspectives on dissemination and transference of

management practices (Rogers, 1995)

management discourse, (Barley and Kunda, 1992)

and national, organizational and management

culture (Hofstede, 2001; Trompenaars and

Hampden-Turner, 1997).

Cultural framework

Culture is defined from the point of view of

different perspectives (Jenks, 1993; Stohl, 2001;

Ting-Toomey, 1999). Culture is defined as a

“patterned ways of thinking, feeling, and

reacting,” which “Both national and professional

cultures come into play” (Gibson & Gibbs, 2006,

p. 114).

Culture is a set of values shared by a

group of people and frequently used to

distinguish one group from another (Gibson &

Gibbs, 2006, p. 284). “Culture is the set of deep

level values associated with societal

effectiveness, shared by an identifiable group of

people” (p. 474). Culture “includes systems of

values; and values are among the building blocks

of culture” (Hofstede, 1984, p. 21). “Culture is

associated with a unit in which members share a

common set of elements-assumptions and

worldviews, values, behavioral norms, patterns of

activities, and material artifacts” (Rousseau,

1990, p. 160).

Culture infuses meaning and identity into

the practices and activities governed by

organizations and institutions.




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Culture is “a history of experiences and

concomitant expectations that shape their

encounters” (Gibson & Gibbs, 2006, p. 37).

Culture is “broadly defined as characteristic ways

of thinking, feeling, and behaving shared among

members of an identifiable group” (Gibson &

Gibbs, 2006, p. 460).

Conceptualization of culture may include

multiple nationalities, demographic features,

multiple teams and organizational cultures.

Culture is a multilayered construct that includes

several markers such as nationality and

citizenship, national culture, ethnicity, religion,

language, etc. Conceptualization of culture is

related to salience and how consequential it is

(Brannen, 2003; Osland & Bird, 2000). Culture

has a complex multifaceted nature (Erez & Gati,

2004) modeled as a cultural mosaic (Chao and

Moon, 2005) suggesting a complex pattern of

geographic, demographic, ethnographic and

associative facets making up an individual’s

cultural identity.

Culture has been researched in terms of

one-dimensional and static views of nationality,

gender and race. It is necessary to explore beyond

this static and dichotomous perspectives and to

move towards a more dynamic and multivariable

approached to culture and distribution to explain

the complexities of the culture processes and

outcomes of multinational and multicultural

distributed teams.

Cross-cultural group development is

influenced by the multiple cultures and

subcultures in distributed team dynamics,

processes and outcomes. The model of cultural

dimensions presented by Hofstede (1980)

provides support for the study of cross-cultural

team cultural processes, particularly the

individualism-collectivism dimension (Sarker,

2005).

The GLOBE cultural project as a

theoretical framework on culture identifies the

national cultural dimensions of power distance,

in-group collectivism, uncertainty-avoidance,

performance-orientation and gender

egalitarianism. Uncertainty avoidance “the extent

to which the members of a culture feel threatened

by uncertain or unknown situations” (Hofstede,

1991, p. 113).

Triandis (1995) studied different cultural

dimensions and found that individualism-

collectivism is the key to understand values,

norms, behaviors, norms, etc. (Sarker, 2005, 19).

Hofstede (1980) found that individualist oriented

cultural dimension, the Mexican culture scored 30

while the US cultures scored 91, the higher in the

individualist dimension.

Organizational adaptability may be high

for new multinational firms because of their

meager international presence and low for more

traditional multinational firms because of their

ingrained organizational structure and culture

(Guillén and García-Canal, 2009). Contrary to

traditional multinational firms from developed

economies, new multinational firms originated

from emerging economies are more dynamic and

away from path dependence without deeply

ingrained organizational culture, values and

structure.

National culture has been depicted as the

software of the mind by Hofstede (1980) to

explain the different behaviors and logics of

people. National culture has an impact on work

values and other social factors that affect

organizational behavior (Rousseau and Schalk,

2000). National culture is “The collective

programming of the mind which distinguishes the

members of one human group or category of

people from another” (Hofstede, 1991, p. 5).




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The constructed TMT culture is assessed

using a simplified version of the Kilmann-Saxton

Culture Gap Survey (Kilmann and Saxton, 1983)

that measures behavioral and operating norms as

descriptions of what actually happens in the

group.

National culture is related to

communication, trust and context as it was found

on Hofstede’s dimensions. Culture may be

constructed as barriers that divide individuals.

Individuals from various nationalities have

different cultural orientations. French and

American culturally grounded beliefs about

business models and practices contradicted and

rejected certain aspects of knowledge held by the

‘other’ (Baba et al. 2004, p. 573).

The cultural dimensions depicted by

Hosftede (1980) can explain cultural differences

and subtleties of culture among individuals from

various nation-states, so nationality is an indicator

of culture. Rao (2009a, b) examines the

dimensions of national culture influencing the

staffing practices in México and analyzes national

cultural dimensions adopting normative

equivalences strategies to identify relationship-

building with survey-response strategies and their

significance. He also identifies the cultural

dimensions in the Mexican culture as predictors

for predominant staffing practices associated

with, and proposes a model for staffing practices

related to cultural dimensions.

Cultural distance presents two boundaries,

distance and culture that presents critical

discontinuities to manage for effectiveness of

global organizational contexts (Cogburn &

Levinson, 2003, Watson-Manheim, Chudoba, &

Crowston, 2002), and constraints to be overcome

(Yuan & Gay, 2006).

Distance to national cultures may result in

partners with longer duration relationships than

partners with close distance national cultures

(Park and Ungson, 1997 and Pangarkar and

Klein, 2001).

Distance is also a leadership and trust

building challenges for multinational

multicultural distributed teams (Oertig & Buegri,

2006) and complicates processes and outcomes

(Cogburn and Levinson, 2003) distributions in

learning environments (Zakaria and colleagues,

2004), temporal and spatial distribution of

knowledge sharing culture.

Temporality considering time as culture

bound and stages in multinational multicultural

distributed members are related. Time as culture

bound is defined on cultural background

(Saunders et al., 2004) by connecting time of an

individual is dependent on the interactions with

organizations and society.

This third new culture is more inclusive

that the two original cultures because it shares a

communality of values, mores, attitudes,

meanings and actions (Adler, 1980; Casmir,

1993; Starosta and Olorunnisola, 1992, Shuter,

1983, Broome, 1993; Kumar and Andersen,

2000).

The emerging third culture is the synthesis

of combined elements and components of the two

merging organizational cultures. The emerging

third culture may be hybrid since the cultural

elements and components to be converged,

merged assimilated or adapted can be negotiated.

Strategic issues is affected by cognitions,

motivations of decision makers and meanings are

conditioned on personality traits and

characteristic in centralized firms and

organizational culture in decentralized firms

(Dutton and Jackson, 1987, Kets de Vries and

Miller 1986).

















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The development of common grounds of

organizational culture is more based on individual

competencies than in differences of management

traditions and national cultures (Chi Cui et al.,

2002, Dollinger and Danis, 1998).

Corporate culture can be created or

reformed in a short period of time to transform

values and promote organizational change in

settings of multinational firms, as for example in

the case of TRW (Ashton, 2002, a b). To create

the corporate culture of TRW, it is used

compensation incentives and benefits, internal

communication, team working and employee

development. The emerging third culture is the

result of the managers input contributions.

Perez Chavarria (2001) analyzes the

creation of common meanings—culture—through

formal communication in a multinational

Mexican company Cementos mexicanos

(CEMEX). Perez Chavarria (2001) has studied

the way organizational culture is formally

communicated in a Multinational Mexican

company (CEMEX assuming that the

organizational culture is composed essentially of

cultural substance and forms (Trice and Beyer,

1993; Bantz, 1993) to reach the inference of

meanings that can be taken as the basis or support

of its culture.

Cultural intelligence is the capability that

a person has to adapt to new cultures and be

effective to bridge activities and issues between

two or more cultures. The findings reflect a

possible interpretation of the culture that sustains

the symbolic reality of the organization.

Davila, Pérez y Habermann (2005, 2001)

use organizational culture theory to analyze the

basic assumptions, shared values and the

behaviors of organizational members in a

subsidiary of a Mexican multinational

corporation. Culture affects the way “information

and knowledge is conveyed and learned” (Gibson

& Gibbs, 2006, p. 17).

Under the assumption that the economy

gains from labor division, differentiation and

collective efficiency on firms of one sector cluster

between each other developing specialized

knowledge reinforced through a common

organizational culture (Young, 1928).

Individuals form subcultures based on

membership dispersion and the interactions of

whom are collocated form norms and cultures.

Subcultures in cross-cultural organizations

emerge based on nationality and participative

decision making and develop on shared national

cultures (Sagie and Aycan, 2003). Thus, two

subcultures are identified as parts of the

multinational, each one with congruent systems

of assumptions and values, although opposite

cultural patterns.

National culture relates to the

effectiveness of distributed team effectiveness,

but is less relevant in situations of swift trust

development (Jarvenpaa, et al. 1998). Cultural

differences among individuals from different

nationalities assessed by the cultural dimension

(Hofstede, 1980) may affect team effectiveness

processes and outcomes.

Cultural differences are conceived as

ideologies and attitudes influence trust of

multinational multicultural differenced teams

(Cogburn & Levinson, 2003). Baba et al. (2004)

uses this framework based on cultural differences

to sustain the ethno history of global virtual

teams.

Individual cultural differences configure

the development of a third culture to benefit

relationships as a mutual an interactive process

(Shuter, 1983, Casmir, 1993) of common

communicative (Cronen and Shuter, 1983)

actions and interactions.







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Cross-cultural capital of individual

members is essential of global virtual teams’

processes and outcomes (Paul et al., 2005).

Virtual teams studied by Kayworth and Leidner

(2001-2002), in France, United States and

Mexico based on nationality as a cultural index to

analyze multiple cultures. In an environment of

multiple cultures, nationality of culture is the base

of an index of members’ cultures (Oertig and

Buegri, 2006).

National cultures influence organizational

culture related to teams (Lee & Barnett, 1997;

Lindsley, 1999). Organizational culture and team

culture are two variables related. Top

management team culture is “cultural differences

reside mostly in practices, less in values”

(Hofstede, 1991, p. 182). The individualism

dimension can be used to explain a distributed

team context. The formation of team network ties,

socio contextual variables are more important

than race and sex (Yuan and Gay, 2006).

“In virtual teams, the individualism–

collectivism dimension is an important dimension

of culture as it reflects the extent to which

members are inclined toward teamwork and open

to accommodating others’ views” (Paul et al.

2005, p. 190). However, Ancona (1987) sustains

that the individualism-collectivism dimension

that team members from different nation states

are also influenced by the cultural context in

which they are engaged confirming that culture is

a dynamic and fluid dimension.

Rigid classification based on the nature of

national cultures does not explain movements and

relocations of populations. A collectivist

orientation enhances collaboration. The family,

community, governments and firms are

institutions in a collectivistic culture.

Collaborative cultural orientation is influenced by

a more collective oriented culture (Paul et al.,

2005). These cultural indicators can explain the

decisions of locational distributions of


Multinational multicultural distributed

teams imply the consequentiality of culture

presenting some other additional challenges

(Kayworth & Leidner, 2002). The multifaceted

view of culture influence team processes and

outcomes in the complexity of distributed teams.

Multinational multicultural distributed teams

have two layers of complexity for potential

influences, the multinational and multicultural

and distribution that have on processes and

outcomes. The complexities of partial and full

distributed teams are related with the

complexities of national cultures and subcultures

depending of the locations (Orbe, 1996).

Multinational multicultural distributed

team focuses on the geographic facet to frame

national cultural differences to equate nationality

and culture. This approach neglects the dynamic

multiplicity of culture. The team composition is

an important factor for multinational multicultural

distributed teams. When the members of a

multinational multicultural distributed teams

understand other nationalities’ beliefs (Baba et

al., 2004) they are effective to share knowledge.

However, Goodwin and Halpin (2006) found

resistance in multinational and multicultural

distributed teams to the development of one

culture where there are several pre-existing

cultures.

The role of distribution and culture of

individuals have influence on team processes and

outcomes. Multinational multicultural distributed

teams influence organizational processes and

outcomes. Multiple cultures and subcultures

emerge on distributed teams. National culture and

subcultures have influence in the decisions of

multinational distributed teams (Oetzel, 1998).

Multiplicities of culture and variations in

distribution are related to multiple team cultures

and organizational cultures. Subcultures as part of

the larger organizational culture affect team

processes and outcomes when occurring at the

team level (Workman, 2005).


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Despite that the subgroups form

subcultures they add to the larger culture of the

multinational multicultural distributed team, a

culture that it is beyond the face-to-face team.

Multinational multicultural diverse

distributed teams have become the norm

prevalence in organizational settings of business

and governments (Rasters, Vissers, & Dankbear,

2002, Wright and Drewery, 2006). Multinational

multicultural distributed teams may have different

purposes: to conduct future research (Maruping &

Agarwal, 2004), to advice practical

recommendations (Harvey et al., 2005). Team

members may work and perform effectively

“across major time zone differences, across

internal business units, and across cultures”

(Chudoba, Wynn, Lu, and Watson-Manheim,

2005, p. 280).

Culture encompasses broad national

differences to include ethnic, genetic, racial,

gender, religion, associations and collectivities,

and other demographic characteristics. Besides

national culture Paul et al. (2005) have focused

on markers of culture and examine cultural

diversity and cultural backgrounds and found that

more diverse teams develop a more collaborative

conflict management style.

Culture creates differences in group

behaviors and communication. Cultural diversity

is represented by differences in backgrounds, life,

philosophies, norms, social identity, language,

etc.

Culture may be looked at as the degree of

heterogeneity and diversity among team

members. Chao and Moon (2005) based on the

demographic tile approaches cultural diversity

and heterogeneity of team’s members. Cultural

diversity and cultural heterogeneity may

strengthen teams if the team members are capable

to respect other languages and cultures.

Diversity of team members involves the

composition of different cultural backgrounds,

unit affiliations, skills, etc. Individuals working in

multinational and multicultural diverse and

distributed teams have diverse national and

cultural backgrounds.

Cultural, institutional and individual

differences are related to risk and safety attitudes

and behaviors in organizations. The meaning of

risk and danger in organizational settings are

shaped by cultural and institutional differences

challenging the assumption that training programs

of safety can be applied to any organization

within a country and across the borders.

National cultures expressed in values,

beliefs and attitudes shape individual marketing

behavior and market orientations (Norburn et al.

(1989). International markets are highly

fragmented despite the economic globalization

processes due to control variables such as culture,

language and other intangible barriers, which in

turn may influence the location of Mexican


The culture and language-specific

attributes of host countries benefit Mexican

multinational firms when competing with other

home countries that do not share these specific

characteristics in investing (Barrios, and Benito-

Ostolaza, 2008).

Human beings must be aware of their

capabilities to assimilate, contribute, share an

experience the new opportunities offered by the

exchange of cultures. Full development of human

potentialities requires participating actively in

experiencing other cultures and ideologies of

economic, political and social systems to become

more cosmopolitan citizen of the world.



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Rabbino, H., Chávez, A. and García, R.

(s.f.) describe the transformations of Mexican

multinationals driven by systems thinking

approach to coordinate all the activities while

maintaining personal culture.

The enactment of the North American

Free Trade Agreement (NAFTA) and the lack of

policies focusing to support and encourage

entrepreneurship were two important causes that

triggered the development of a new

entrepreneurial culture. Business community

suffers from lacking business culture skills and

understanding others cultures. An initiative

focused on Mexican culture, the Business Culture

in Latin America (BUCLA) provides a solution

through e-learning.

This new entrepreneurial culture led to the

emergence of business more oriented to

international markets. Some medium businesses

are developing a transnational business culture,

such as the software industry. Hildebrando is the

largest software producer that started operations

in the 1980s opening the software factory in

México City and offices in the three largest cities

in México, in Miami and Madrid.

Female’s migrants confront greater risks

of international migration because of a culture of

domesticity (Kanaiaupuni, 2000) and the lack of a

more entrepreneurial culture oriented towards

transnational processes.

Involvement of organizational culture in

internationalization processes of multinational

firms

The new multinational firms from emerging

economies follow some patterns of development

and expansion consistent with the staged theories

of internationalization and product life cycle

theory besides the tendency to expand in foreign

markets that have similar culture.

Organizational culture has an impact on

the outcomes and the degree of organizational

involvement in strategic alliances and

international ventures (Meschi and Roger, 1994;

Pothukuchi et al., 2002).

The design of organizational cultures

incorporates the cognitive diversity of partners

and provides intercultural fits between and among

the firms structured in international strategic

alliances. The design of the strategic alliances

own corporative and organizational culture

considers the formation of more intercultural

oriented relationships cooperation and shared

leadership (Rodríguez, 2005).

National cultures are the anchors of

organizational cultural that may dilute with the

negations of the emerging third culture to define

relationships of the new management style,

behavioral mechanisms, trust development and

access to strategic knowledge (Brannen and Salk,

2000; Casmir, 1993,Salk, 1997, Barkema et al.,

1996, Rodriguez and Wilson, 1995, Inkpen,

2000).

The intercultural fit makes compatible the

involved national cultures in an organizational

culture as the determinant of relationship

performance (Rodriguez and Wilson, 2002,

Rodriguez and Wilson, 1995; Sarkar et al., 2001).

Similarity of national cultures may have

less impact on strategic alliances than

organizational cultures and compatibility of

organizational processes (Brown et al., 1988;

Inkpen and Birkenshaw, 1994; Kogut, 1989).

Congruence between national cultures and

managerial practices influences the strategic

alliance performance (Newman and Nollen, 1996;

Baird et al., 1990, Davis and Rasool, 1988).




















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Differences between individualist and

collectivist value oriented national and

organizational cultures as a mind frames may

affect the cross-cultural relationships and the

nature of managerial and attitudinal interactions

in strategic alliances (Chen et al., 1998, a, b.;

Hofstede,1980).

Culture influences traits, perceptions and

responses of followers to managers and leaders in

power positions in strategic alliances. Different

national cultures influence the requirements of

values in management and leadership styles and

practices (Newman and Nollen, 1996, Brodbeck

et al., 2000). Culture of the top management

members may influence management and

leadership style and contribute to the performance

of the strategic alliance as a whole (Bettis et al.,

1978; Das, 1981).

The interaction and interdependence of

national cultures are part of strategic alliances

which may combine elements and create a more

coherent third culture (Cartwright and Cooper,

1993).

An organizational culture functioning as

the result of negotiations between values and

attitudes to develop a compatible third culture in

the organizational context is the critical factor in

cross-cultural strategic alliances and joint

ventures (Lane and Beamish, 1990; Perlmutter

and Heenan, 1986; Teagarden and Von Glinow,

1990).

Differences in national cultural values

influence the implementation of management and

leadership skills in strategic alliances. National

culture influences top organizational leadership

which in turn permeates the design of

organizational cultures and define managerial and

leadership styles in the strategic alliance

(Hollander and Offermann, 1990; Likert, 1961;

Pothukuchi et al., 2002).

Managerial values of complex cultural

organizations involved in strategic alliances

through social interactions and negotiations

between each other shape the nature and shared

content of a hybrid new culture (Brannen and

Salk, 2000). Management in international

alliances face the challenge of reconciles

managerial practices based on cultural

backgrounds and the corporative and

organizational culture.

The management of a multiplicity of

meanings in different national cultures may

determine the success of strategic alliances in the

international global market (Kumar and

Andersen, 2000). When selecting partners of

strategic alliances, managerial capabilities (Hitt et

al., 2000) and management practices which are

congruent with their national cultures,

organizations improve performance (Newman

and Nollen, 1996).

However, management practices are more

congruent with national culture dimensions such

as individualism orientation of innovation in US

managers, task support and social relationships in

Mexican management practices (Rodríguez,

2005, Newman and Nollen, 1996; Parkhe, 1993

and Very et al, 1993).

Managers from different cultural

backgrounds developing relational assets in

partnerships with international strategic alliances

maybe instrumental to develop a new common

third culture (Rodriguez and Wilson, 2002) based

on individual and structural ties (Inkpen and

Beamish, 1997).

Support from the state and

implementation of strategies to enter into

institutional strategic alliances between different

stakeholders and business groups may be only to

steps in the right direction for

internationalization.
































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Management culture cognition, values and

interpersonal relationships dynamics affect the

strategic leadership styles in organizations,

management decisions and thus, organizational

performance (Hambrick, 1989).

The culture of the top management team

has effects on organizational performance (Bantel

and Jackson, 1989; Finkelstein, 1988; Hage and

Dewar, 1973; Tushman et al., 1985).

Organizational culture dimensions of Mexican

and US strategic alliances are determinants of

management rules and social norms. US

management style is shaped task innovation in

management team culture and manager’s

personality in emotional stability focusing on

long-term planning and emotional responsibility,

innovation, personal change and individualist

orientation (Rodríguez, 2005).

For example, Mexican-US strategic

alliances are shaped by an intercultural fit through

a predominant management style framed by

national culture and management team culture

(Rodríguez, 2005). Rodríguez (2005) found that

the organizational culture existing in the Mexican

and American alliance is bounded by the values

and norms that construct the social reality by

management to converge into a third culture

characterized by being more participative and

consultative style.

Management styles in international

strategic alliances with different national cultural

dimensions coexist; negotiations for a new

organizational culture blend the styles of adaptor

and innovator in one common management style.

The predominant management styles in strategic

alliances are strongly influenced by the

organizational culture and are not shaped by

national cultures (Rodríguez, 2005).

National cultures of managers are

positively related to their management styles in

US-Mexican strategic alliances. The US-Mexican

strategic alliances are supported by two different

national cultures; one belongs to a developed

market and the other one to an emerging market.

Each one of these two cultures has different

approaches to management styles and

relationships (Dorfman and Howell, 1988;

Hellweg et al., 1994; Pavett and Morris, 1995).

Managerial culture in US-Mexican strategic

alliances is influenced by top management and

leadership styles of both national cultures.

Predominant management styles of

Mexican and US managers are converging in

strategic alliances where Mexican is trying to be

more consultative and US more authoritative. US

management is shaped by task innovation in top

management culture and emotional stability in

manager’s personality.

Predominant Mexican management style

is a function of task support and social

relationships as part of management culture

focused on short term planning a close working

relationships, although not linked to manager’s

personality and national culture (Rodríguez,

2005).

Mexican management style is not linked

to manager’s personality and national culture but

determined by task support and social

relationships in management team culture

focusing on short term planning, efficiency

oriented supported by group cooperation and

friendship, intrinsic collectivist nature shared

decision making and work fair assignment

(Rodríguez, 2005, Chen et al. 1998a, b and

Hofstede, 1980).

Managers of joint ventures (JV) may

introduce some variations to management control

systems of a global multinational firm to

institutionalize a global management control

system.













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The global management control system

may match technical and institutional criteria to

satisfy the logics of JV´s managers. This may

facilitates post-acquisition strategy to facilitate

integration of new firms to the organizational and

work culture.

Local-global culture of corporate social

responsibility strategy

Global corporate social responsibility is equally

common among all types of multinational firms

(Husted, and Allen, D., 2006). Actions of

corporate social responsibility may depend upon

the processes of institutional isomorphism that

are linked to the organizational strategies in the

multinational firms conceived as a response to

different pressures in their product markets

(Prahalad and Doz, 1987).

The UN Global Compact provides an

institutional structure for global corporate social

responsibility issues of multinational firms in

partnership with nongovernmental and

governmental organizations. Husted, and Allen,

D. (2006) conclude that multinational firms are

more likely to manage corporate social

responsibility according to some institutional

pressures rather than an organizational strategic

logic.

Multinational corporations have to foster a

culture of corporate social responsibility strategy

involving all stakeholders to improve the

effectiveness of strategic alliances (Weyzig,

2006). Multinational firms from emerging

economies are challenged by their firm and

country specific institutional distance to face the

obstacles presented by foreign emerging markets

and economies such as the issues such as social

and environmental corporate responsibility

(Dunning 2006).

Husted, and Allen, D. (2006) conclude

that corporate social responsibility conforms to

the multinational organization strategy

established for marketing activities suggesting

that this multinational organizational strategy

influences the design of other strategies through

institutional processes.

CSR strategy in Mexico as in any

developing economy is driven and molded by

specific national and institutional factors but

private investor initiatives are effectively

disempowered (Jamali and Mirshak, 2007).

Stakeholders of Mexican multinational firms lack

engagement in a strategy of CSR due to a no ideal

chaotic environment framed by historical

confrontational attitudes and the lack of alliance

culture, although sometimes firms may be

inclined to make some philanthropic actions.

Advancement of CSR in Mexican

multinationals requires a commitment on a strong

regulatory culture capacity building instead of

taking a voluntary approach, more involvement

with civil society actors and more public pressure

to address specific barriers.

The strategy CSR followed by Grupo

Bimbo is part of the natural activities immersed

in its culture with internal and external,

economic, social and environmental aims. The

environmental internal purpose is to create a more

environmental friendly awareness culture among

its associates and use resources in the most

efficient way (Grupo Bimbo, 2009, pp. 1).

Grupo Vitro the Mexican glass

multinational firm has implemented the CSR

strategy in community service activities such as

recycling, environmental protection and the

promotion of art and culture, supporting schools,

development programs and the glass museum in

its founding city Monterrey (Paul et al., 2006).

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The international organizational strategy

followed by multinational firms operating in

Mexico in relation to local-global corporate social

responsibility (CSR) that guides decision making

is to respond to institutional pressures for

responsiveness rather than to replicate strategic

analysis of social and environmental issues.

Discussion: Glocal-regional institutional and

cultural transformation, convergence and

governance

The term glocal is a short designation mixing the

terms global and local and meaning the

inextricable interrelationships between both

levels of the same scale.

Without glocal-regional institutional and

cultural convergence, economic globalization

processes are complicating glocal-regional

governance for the achievement of a more fair

and equitable global economy.

However, in an era of economic

globalization processes, manufacturing and

marketing activities are becoming more

transnationals and internationals in irreversible

tendency while retiring from the nation-states as

the dominant institutional frame of reference.

Consumers and workers are important

stakeholders in multinational firms who can get a

position of bargaining over institutional and

cultural transformation.

The internationalization of operations and

activities of multinational firms are supported by

the cultural and institutional geo-centralization

affecting the nation-state and the national

systems. The tendency to institutional and

cultural geo-centralization is not limited to

operations of multinational firms but also to other

institutions such as operations of labor unions and

national governments, education, etc.

An example of this argument is sustained

by Teague (2003) who examines a tri-national

institutional arrangement the Labor Side Accord

of NAFTA called North American Agreement on

Labor Cooperation (NAALC). The institutional

design of NAALC arrangement for the labor

market in a regional trading agreement is

horizontal and decentralized but still is required

that the three participating economies in NAFTA

should adopt a more proactive approach to labor

relationships transnational collaboration.

To find a balance among the interests of

multinational, regional and local actors involved

in internationalization economic processes, it is

required new institutional and cultural

arrangements in order to develop new forms of

governance capable to manage economic growth

and development. The new institutional and

cultural arrangements should be able to facilitate

the integration of investments, financial,

technological, manufacturing and marketing

activities without ignoring the interdependence

with environmental, social, political and cultural

variables.

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